Russian inflation just plunged to its lowest rate in nearly five years.
Consumer prices rose by 4.6% year-over-year in February, shy of the 4.7% increase that economists were expecting and below the prior month’s print of 5.0%.
This was the lowest rate since June 2012.
Prices rose by just 0.2% in month-over-month terms, compared to expectations of a 0.3% uptick.
Looking under the hood of the data, the drop in prices was in large part due to a drop in food inflation, which printed at 3.7% in February, compared to 4.2% in January.
Back at its February meeting, the Central Bank of Russia held rates at 10.00% and noted that it saw less room for rate cuts going forward amid rising inflation risks.
However, Tuesday’s “data make the next central bank interest rate meeting on 24th March an extremely close call. Moves in market-based inflation expectations and the three weekly CPI released due between now and then will determine whether the Board lowers interest rates or stands pat,” William Jackson, senior emerging market economist at Capital Economics, wrote.
“We will firm up our forecast closer to the time although, as things stand, we think it’s more likely than not that the Board will opt to lower interest rates,” he added. “Either way, with inflation likely to be lower than most expect, the easing cycle will ultimately be much larger than the markets are currently pricing in.”
The Russian ruble is up by 0.4% at 58.0501 per dollar as of 8:37 a.m. ET.